The United States has undergone a series of changes these last few months with businesses shutting down, then reopening on a limited basis and life normalizing (on some level) amid the coronavirus pandemic. As states reopen their economies, however, COVID-19 cases are on the rise.
According to the KFF (Kaiser Family Foundation), a non-profit focused on national health issues, 34 states are currently considered “hot spots”—areas where cases have increased by more than 5 percent over the past 14 days; the positivity rate is greater than 10 percent over a 7-day rolling average; or the positivy rate has increased by more than 1 percentage point over the past 14 days.
Topping the list with the largest 7-day rolling average positivity rate are:
– Arizona: 26.8 percent
– Mississippi: 22.8 percent
– Florida: 19.1 percent
– South Carolina: 17.2 percent
– Texas: 15.6 percent
– Alabama: 14.7 percent
– Georgia: 13.5 percent
– Nevada: 13.1 percent
– Idaho: 11.9 percent
– Kansas: 10.4 percent
Click here to view an interactive map of the U.S.
How is real estate impacted in these new coronavirus hot spots? Real estate practitioners share how their markets are faring:
Rei Mesa, president and CEO of Berkshire Hathaway HomeServices Florida Realty, says that not much has changed on the real estate front due to measures the brokerage applied early on.
“We have been very proactive since way back on our approach of in-person customer interactions,” says Mesa. “We put safety at the forefront, so there hasn’t been a major change since we’ve just continued doing the same things: wearing face masks, cleaning with disinfectant, using virtual components, etc.”
What has changed, however, are homebuying trends.
“There has been a significant increase in the number of cash buyers and conventional mortgages due to the competition among buyers to secure the winning bid in multiple-offer situations,” says Beth Goldsmith, owner and team leader of Sold by the Gold of North Eastern Group Realty in Indiana. “This will continue to be a difficult market for buyers who have small down payments or limited cash to cover the spread between purchase price and appraised value.”
Mesa says he’s seen a change in property needs as well.
“We are seeing a huge demand for buyers purchasing single-family homes and not so much condos. It has to do with avoiding hallways, elevators, common areas, etc.—where people tend to gather,” says Mesa. “There’s also a desire to have private pools and areas where they can entertain their family and not be at risk. This is probably a temporary desire, but we’ve gotten a great deal more demand.”
Also of importance? Location. According to Brett Furman, broker/owner of RE/MAX Classic in Pennsylvania, buyers have been gravitating away from the city to the suburbs.
For many, markets are bustling at varying degrees and price points.
Ohio has experienced a spike in cases with a 68.7 percent change over the past 14 days. However, the markets remain strong in the lower price points, according to Victoria Valle, president and lead listing agent of Victoria’s Luxury Home Team at Danberry Realtors.
“The market is picking up in the $300,000-and-under range and has slowed way down in the over-$500,000 range,” says Valle.
In California, which has had a 62.2 percent change in cases over the past 14 days and 6,749 total related deaths, according to KFF, concerns over the coronavirus haven’t weakened homebuyer interest either.
“All markets we serve, from Santa Barbara down to the Mexican border are fast-paced, with homes receiving multiple offers in many cases,” says Mary Lee Blaylock, president and CEO of Berkshire Hathaway HomeServices California Properties. “We’ve seen lots of cash offers as well, indicating the strong consumer confidence in the real estate market as a viable investment.”
In Georgia, consumer confidence has been impacted at some level, according to DeAnn Golden, senior VP and managing broker of Berkshire Hathaway HomeServices Georgia Properties, but that hasn’t caused real estate to stop in its tracks.
“For clients who have experienced COVID layoffs, furloughs or decreases in income, it has impacted their consumer confidence, says Golden. “However, there are many solid buyers, sellers and investors who view this as one of the most opportune times to invest in real estate due to all the other positive economic factors, such as low inventory, low interest rates, demand for rentals, etc.”
Also of concern is the widening income gap, says Furman of real estate in Pennsylvania.
“Historically, a house in the U.S. cost three or four times the median annual income. During the housing bubble of 2007, the ratio surpassed five,” says Furman. “We are watching the spread increase between income and home price, and are concerned that we are getting close to the 2007 market.”
And with rising home prices and increased bids, the inventory challenge that’s plaguing the U.S. has worsened.
“At the end of May, there were 1,698 resale residential properties on the market for all of Greater Tucson, which is 1.5 months of inventory,” says Eric Gibbs, designated broker of Realty ONE Group Integrity in Arizona. “At the end of June, the inventory decreased by another 349 homes, which brings our inventory to 1.2 months for a total of 1,349 homes on the market. Sellers are only listing their homes if they have to and are waiting until there is a downtick in COVID cases.”
In addition to an inventory shortage, lending restrictions are tightening, posing further challenges.
“With cases rising most recently, the same health and financial concerns are ever-represent, but lending restrictions have become clear since then, and interest rates have remained low, which, in our already-speedy market, has kept buyers from competing for properties as they become available,” says Sage Francetich, associate broker of Team Idaho Real Estate.
On the other end of the spectrum, in Texas, which has had a total of 133,086 related deaths and a 72.7 percent change in cases, consumer confidence remains strong. And that has a lot to do with the inventory crunch felt across the nation.
“We have not seen a decline in consumer confidence but rather an increase,” says Nimesh Patel, broker/owner of RE/MAX Fine Properties. “We are fortunate to be in areas of new construction, so more buyers are heading in this direction. As for sellers, we continue to practice safe showings methods, and they know that inventory is fairly low in our marketplace, so they too are confident in listing.”
Patel says he’s seeing multiple-offer situations about 40 percent of the time.
As many states roll back their reopening phases, real estate continues to move forward.
For example, in Florida, many beaches closed for the Fourth of July holiday weekend to minimize crowds, says Mesa. And in California, Gov. Gavin Newsome ordered Los Angeles to close bars and restaurants and to halt indoor dining to slow the virus spread.
But real estate professionals continue serving clients while keeping everyone safe, leaning on technology for help, in addition to the usual precautions for any in-person interactions.
“We are definitely focused on using tech, and buyers and sellers are saying they are comfortable. The number of in-person interactions has reduced, but we’re still transacting,” says Mesa.
Golden says that “evolving the real estate services offering into the ‘now new world of socially safe residential real estate sales,'” is one of the most important evolutions the industry has faced.
“The fast-expanding, comprehensive offering of virtual showings, tours, open houses, floor plans and staging is also meeting consumers’ needs. Leveraging the potential for change in our industry is exciting to better meet the expectations and needs of our buyers and sellers, and will only affirm the confidence they have in us as we move forward,” adds Golden.
Furman says his brokerage is recommending that sellers reach out to them earlier than typical to give them time to “position our clients for virtual showings in the event of a COVID-19 fall spike and the possibility that the governor of Pennsylvania orders REALTORS®, inspectors and photographers to cease in-person business.”
What’s the market outlook for these next few months?
Blaylock anticipates continued low interest rates, pent-up demand and low inventory with an “extremely robust and strong market” through the end of 2020.
Mesa hopes to see a more serious approach on the part of state government to curb the infection rates.
“I believe that if Florida can be serious about curbing the infections, we will continue to be a very desirable place for people who want to live here,” says Mesa.
But if the spread doesn’t slow, other market segments like construction could be impacted, he says, and that could worsen an already aggravated problem.
“On the seller side, we continue to have challenges getting inventory, and home builders are still way behind on the housing shortage,” says Mesa.
“If the inventory continues to decrease as it has over the last 10-plus months, it could pose more havoc on the market,” says Gibbs. “Our hope is to obtain more listings in the coming months to help with the supply and demand. New construction is doing their part, offering incentives to the buyers, plus building more spec homes—this will all help.”
Golden remains cautiously optimistic about the remainder of the year, forecasting pent-up demand, low interest rates and a diversified economy that is resilient.
“We will proceed with a positive mindset and an abundance of caution and safety and respect for all,” says Golden. “There are challenging times indeed, but we have choices for how we choose to respond in times of setbacks. I am inspired by our REALTOR® community who is employing safe guidelines to evolve in these changing times and still making homeownership happen safely.
Francetich agrees, stating the virus likely isn’t going away anytime soon, so it’s best to move forward and educate clients.
“It’s essential that buyers and sellers speak with an agent that understands their needs, accommodates them and implements good practices to keep our communities safe,” he says.
Liz Dominguez is RISMedia’s senior online editor. Email her your real estate news ideas to firstname.lastname@example.org